Annual Returns - Avoid The Nightmare
How To Get Your Company's Annual Returns Done In Good Time And Sleep Soundly.
There are basically three returns your company has to make yearly; 2 financial and 1 merely literary.
The financial ones are made to HMRC and Companies House. These are your company's financial accounts; profit and loss, loans and dividends, etc. The 2 financial returns are similar, in that they cover the same thing; the money your company has made, lost or retained.
The other is made to Companies House alone and is a statement about the status of your company; who it's director's are, what its registered office is, etc. Your annual return to Companies House is different from your company’s annual accounts and tax return, and usually won’t be done at the same time.
- The key websites are: https://online.hmrc.gov.uk/ and https://ewf.companieshouse.gov.uk/
You set up an accounts on these sites and you or your accountant can do the essential returns which keep you from getting fines. You get fined if you don't submit returns on time. (This assumes you have not informed HMRC or Companies House of a reasonable excuse. "My accountant is a bit stupid" is not a reasonable excuse. Fire, flood or theft, are.)
Set up your accounts on these sites now, if you have not done so already. What often happens is that people think that because, from the date of formation of their company, they have a year + 9 months before they have a deadline, they have plenty of time.
Well, my friend, time flies. Here's what can happen:
- You get your reminder letter that your returns are due, you rush to set up an account online and then you realise they have to post you an authentication code, which could take days to arrive.
- You call round to your accountant in a panic, with a shoebox of receipts under your arm, only to find he's gone on holiday.
- You download the HMRC accounts filing PDF and find that, even though you think you've entered your accounts correctly, it's throwing up an error.
- You don't realise that you have to have your tax paid by the deadline, not just have the return submitted.
And the clock is ticking ...
This is a horrible feeling and one which can be easily avoided.
Get your logins to HMRC and Companies House set up soon after your company is formed. Get an accountant. Keep records in an Excel spreadsheet of your Income and Expenditure, to make it easier for him. The less work he has to do, the less you have to pay him. Hopefully!
Make notes of when your returns are due and remind him 3 months in advance. This will give you time to deal with any screw-ups. Get an accountant unless you have accounting experience and your company's finances are piggy-bank simple.
The Company's House website has a pretty good overview:
At the end of its financial year, your limited company must prepare full (‘statutory’) annual accounts.
You then use this information to:
- Send accounts to Companies House
- Pay Corporation Tax - or tell HM Revenue and Customs (HMRC) that your limited company doesn’t owe any
- Send a Company Tax Return to HMRC
File annual accounts with Companies House
9 months after your company’s financial year ends
Pay Corporation Tax
9 months and 1 day after your company’s financial year ends
File a Company Tax Return
12 months after your company’s financial year ends
These deadlines are for private limited companies.
Your Corporation Tax and Company Tax Return deadlines may be different if your accounting period is different to your financial year.
The above is why getting your letters from HMRC and Companies House is useful. They are tangible reminders about when you need to file. Emails can go into a spam folder and electronic calendars can go on the fritz. Letters sit there, balefully, reminding you of your slackness.
The British government has embraced digital technology and made submitting as easy as they can. HMRC's PDF, which you download from your online account, does your tax calculations for you.
You can then pay your tax bill online via their preferred gateway, or go to your post office with the payment mandate they post you and pay there.
IMPORTANT: It can take 2 weeks for the post office to remit the payment. So don't use this method if your deadline is looming.
From their PDF:
Welcome to the Company Tax Return and Accounts Service. This service allows you to:
• submit Statutory, Basic Micro-entity or Abbreviated Accounts to Companies House, and/or
• submit the Company Tax Return including Statutory or Micro-entity Accounts to HM Revenue and Customs
A Company Tax Return is made up of a CT600, tax computations and accounts. This service includes:
• the form CT600 Company - Short Tax Return and Supplementary Pages CT600A, E and J
• a computations service to record your detailed expenses and to help you calculate your profits and losses for tax purposes
• an accounts service to report or attach your Statutory or Micro-entity Accounts
This service also allows you to attach additional items accompanying the return, such as claims or elections.
The HMRC Company Tax Return and Accounts Service PDF allows you to send financial returns simultaneously to Companies House and HMRC. Note, however, that this should probably one be done by someone technically competent with a PC and its foibles and who has accounting knowledge. This is probably not you! The form can throw up annoying errors which you will not be familiar with and which increase the stress of an already stressful experience.
That said, they've made a complex job as simple as they can, and it is impressively done.